Dec 27, 2012

Vietnam - Gov’t suggests ways to save businesses, spur market

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HANOI – Saving businesses, developing the market and settling bad debts are the main tasks Prime Minister Nguyen Tan Dung highlighted at an online meeting between the Government and localities on Tuesday.

The two-day meeting will continue today with a focus on the key measures to achieve the socio-economic and State budget targets for 2013.

When presenting a draft resolution on solutions to remove difficulties for production and business, support the market and tackle bad debts, Deputy Prime Minister Hoang Trung Hai placed an emphasis on inventory reduction.

As per the draft resolution, the localities with high volumes of unsold property products should reduce the use of their budget funds for development of new resettlement housing projects. Instead, the budget capital should be used to buy appropriate commercial houses to serve resettlement or turn them into low-cost houses for sale or for lease.

The central bank is asked to set aside VND20-40 trillion for refinancing with reasonable interest rates and a maximum term of ten years to help State-run commercial banks serve home loan borrowers.

Besides, a 50% land rent cut in 2013 and 2014 is proposed. Investors will also enjoy a land rent payment extension for up to 24 months depending on their sales performance.

The Government agreed with the Ministry of Finance on the proposed solutions to rescue businesses. They include a corporate income tax rate of 20% for small and medium-sized enterprises (SMEs) and a special rate of 10% on earnings from low-cost housing trading starting from July 1, 2013.

In addition, a 50% value added tax (VAT) reduction from July 1, 2013 to June 30, 2014 is proposed for low-cost housing investment and trading.

Labor-intensive enterprises and SMEs should enjoy a six-month extension in corporate income tax and VAT payments in the first quarter of 2013 and three-month extensions in the following two quarters.

As for bad debts, the Government requested relevant agencies to complete and submit the model of the national asset management company so that the Government could issue a decree in January and report it to the Politburo.

Specifically, the finance ministry will be in charge of drawing up a plan for issuance of government debt instruments to handle bad debts. In addition, the ministry will study and submit policies and regulations on tax exemption or reduction and charges related to the purchase and sale of bad debts and collateral for loans at credit institutions.

Deputy Prime Minister Vu Van Ninh stated the scheme for weak bank restructuring was underway and bad debt issue was under control. Only one of the nine banks classified as weak is still waiting for the central bank to consider an appropriate restructuring scheme.

To reach the macroeconomic targets for 2013, especially GDP growth, inflation control and export growth, the Government will direct the central bank to practice prudence in the monetary policy with interest rates consistent with macroeconomic developments, overcome shortcomings in management of the gold market and basically complete the restructuring of credit institutions.

Regarding the fiscal policy focusing on the fight against tax evasion, tax arrears and transfer pricing, Ninh suggested local governments to increase tax collection by 3-5%.

From now to 2015, the Government will announce budget capital allocations early so that localities can balance their capital sources and avoid dispersed investment. However, localities must contribute to the settlement of capital construction debt, he said.

Minister of Planning and Investment Bui Quang Vinh reported the total State budget revenue in 2012 was estimated at VND714.5 trillion, 0.14% higher than the estimate and up 5.3% compared to 2011. The total budget spending is around VND904 trillion, 0.11% higher than the estimate and up 14.6% against 2011.

Budget deficit stays at 4.8% and GDP growth is put at 5.03%.

Ngoc Lan - The Saigon Times Daily

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